Saudi Arabia and UAE Plans To Employ Blockchain For An Official Interbank Cryptocurrency
While economies around the world are still largely unsure about cryptocurrencies, they are still willingly stepping into the ecosystem in order to explore expansive use case of cryptocurrency and its underlying blockchain technology.
Stepping into the crypto space, the Saudi Arabia and the UAE have decided
to explore the blockchain technologies in order to facilitate financial operations between the two countries.
The same was announced after the Executive Committee of the Saudi-Emirati Coordination Council held its first meeting in Abu Dhabi. According to an article published by the Emirates News Agency, policies and issues pertaining to regional development in the economic, social and military fields were addressed in the meeting.
Headed by Mohammad bin Abdullah Al Gergawi, Minister of Cabinet Affairs and The Future, from the UAE side, and Mohammed bin Mazyad Altwaijri, Minister of Economy and Planning, from the Saudi side the committee has 16 members from both countries. The committee has announced seven joint initiatives that will be implemented throughout the course of 2019.
An Official Interbank Cryptocurrency
A pilot project was announced that will oversee the creation of a commonly accepted cryptocurrency of interbank nature in a first instance:
“The cross-border digital currency will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of Blockchain technology and facilitating cross-border payments. The virtual currency relies on the use of a distributed database between the central banks and the participating banks from both sides. It seeks to safeguard customer interests, set technology standards and assess cybersecurity risks. The project will also determine the impact of a central currency on monetary policies.”
As of now, the integrities pertaining to the project haven’t been revealed by the team. In all likeliness, central banks of both countries will function as fully validating blockchain nodes as it is a joint initiative.
Furthermore, the local traditional banks will have nodes of inferior hierarchy used for the processing of transactions. In order to not give general public access the information, the blockchain will be kept private, while still being a centralized blockchain.
The design might also enable reversal of transactions in case central banks need it. While it is not known when the first tests will start, the central banks might have picked up certain tricks as they are somewhat familiar with blockchain technologies developed by Ripple, IBM, and ConsenSys, giving gives them fundamental knowledge of the xRapid, Hyperledger and Ethereum platforms.